NEW YORK--()--Fitch Ratings affirms the 'AAA' ratings on the senior student loan notes issued by Kentucky Higher Education Student Loan Corp. 2010 Trust, Series 2010-1. The Rating Outlook is Negative. The collateral supporting the notes consists of student loans originated under the Federal Family Education Loan Program (FFELP). A detailed list of rating actions follows at the end of this press release.
Fitch used its 'Global Structured Finance Rating Criteria,' 'U.S. FFELP Student Loan ABS Rating Criteria', and 'Rating U.S. Federal Family Education Loan Program Student Loan ABS' to review the ratings.
KEY RATING DRIVERS
Fitch affirms the ratings on the senior notes based on the sufficient level of credit enhancement to cover the applicable risk factor stresses. The credit enhancement consists of overcollateralization and projected minimum excess spread. The Negative Outlook on the senior notes is tied to the outlook on the U.S. sovereign rating.
Since FFELP student loan ABS rely on the U.S. government to reimburse defaults, 'AAAsf' FFELP ABS ratings will likely move in tandem with the 'AAA' U.S. sovereign rating. Aside from the U.S. sovereign rating, defaults and basis risk account for the majority of the risk embedded in FFELP student loan transactions. Additional defaults and basis shock beyond Fitch's published stresses could result in future downgrades. Likewise, a buildup of credit enhancement driven by positive excess spread given favorable basis factor conditions could lead to future upgrades
Fitch has taken the following rating actions:
Kentucky Higher Education Student Loan Corp. 2010 Trust, Series 2010-1:
--Class A-1 affirmed at 'AAAsf'; Outlook Negative;
--Class A-2 affirmed at 'AAAsf'; Outlook Negative.
Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' dated June 6, 2012;
--'Rating U.S. Federal Family Education Loan Program Student Loan ABS' dated April 3, 2012.
Applicable Criteria and Related Research
Global Structured Finance Rating Criteria
Rating U.S. Federal Family Education Loan Program Student Loan ABS Criteria